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Income Disparity, Inequity Aversion and the Design of the Healthcare System
Author(s) -
Leach John
Publication year - 2009
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2009.01564.x
Subject(s) - health care , welfare , public health insurance , social insurance , inequity aversion , economics , social welfare function , inequality , public economics , social welfare , public healthcare , healthcare system , health insurance , business , actuarial science , economic growth , political science , mathematical analysis , mathematics , law , market economy
An ex post social welfare function is used to evaluate alternative healthcare systems. If a society is averse to inequality and there is some income disparity, social welfare under private healthcare insurance is sometimes higher and sometimes lower than social welfare under public healthcare. However, a third system—public healthcare with the option to purchase supplemental healthcare insurance—is always socially preferred to private healthcare insurance. Moreover, it is either socially preferred to public healthcare or equivalent to it.